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Five Facts About Financial Aid (excerpt from How to Go to College Cheaper)
The numbers are staggering, but the U.S. Department of Education provides “. . . more than $83 billion in aid to nearly 14 million postsecondary students and their families” (Education, 2009a). In addition, according to the National Center for Education Statistics, 66% of undergraduate students in the 2007-08 school year received some form of financial aid (Statistics, 2007-08).
As you begin your involvement with the federal financial aid system, there are a handful of important facts you should know. As your involvement in the system deepens, probably beginning with the financial aid award letter (you’ll receive one from each school you apply and send your financial aid information to), more questions will arise. If, however, questions you can’t answer do crop up before that, contact your high school counselor or a financial aid professional at the school(s) you are considering. Until then, it’s best to keep it simple.
Fact 1 - Financial aid is intended to help you pay for college, not pay for it entirely for you. The federal government has determined that the individual attending college and their immediate family have a responsibility to pay for a portion of college expenses. The FAFSA (Free Application for Federal Student Aid) is the universally accepted form on which you will be asked to give the financial and other information on yourself and your family. Based on all the information you provide, an EFC (Expected Family Contribution) is determined. Basically, the difference between the cost of attending a school and a student’s EFC, is that student’s financial need. Through their financial aid award letter to students, schools try to come as close as possible to meeting that financial need. I mentioned earlier something about having an EFC of zero. . . that would mean your family was not expected to contribute anything (or to contribute zero) toward your college expenses. This is fairly rare and you shouldn’t expect your EFC to be zero. However, the lower the EFC, the greater the potential for you to receive federal financial aid.
Fact 2 – Need-based financial aid comes in three basic types; grants, work-study and loans. Grants are like scholarships in that they are free money given to you to pay for college, but unlike scholarships in that they are based on need, not merit. Work-study is student employment, either on-campus, community service, or related to your major, that is subsidized by the federal government. Loans, as you would expect, are money borrowed to pay for college. Loans come from numerous sources, have different repayment terms, and even different borrowers (some monies are loaned directly to the student, some to the parents). Although some students and their families don’t consider loans to be financial aid, since they’re not “free”, that is exactly what they are. In fact, the vast majority of financial aid available for college students is made up of student loans and parent loans.
A detailed discussion of specific financial aid types and amounts is more appropriate once you receive your award letter(s). At that time, the best source of information is that school’s Financial Aid Office staff.
Fact 3 – You should plan to complete and submit the FAFSA as quickly after October 1 as possible, for the next academic year's aid. Because schools only receive so much of certain campus-based financial aid programs, they will probably run out of funds in these programs. Having your FAFSA submitted and your file complete as early as possible puts you in the best possible position to receive these awards – if you qualify.
Because the FAFSA is now (as of the 2016-17 academic year) based on what is called the prior-prior year (if you are applying for aid for the 16-17 school year, your aid will be based on the 2015 year's income, assets, etc.), it will be easier to have complete information to submit.
One hint, though. . . Because much of the FAFSA must be completed by others, and it can be intimidating, you need to make sure you’ve done your part first. Your part includes filling in your name, address, social security number, and other basic information, as well as your income and asset information. In addition, make sure you have the name and contact information of someone you can use as a resource while filling out the form (your high school counselor or a financial aid professional at one of your schools), in case questions come up at the last minute. I also think that you should be available and involved when your parents are filling out the form. If you do all these things, I think you’ll make it easier on your parents when it’s their turn. You’ll show you are involved in the process and don’t expect them to just take care of things for you.
Fact 4 - You can ask for special consideration of extenuating circumstances if you think the information you provided via the FAFSA doesn’t appropriately reflect your situation. While it is common for many people to think their situation warrants special consideration, these instances usually involve a significant change in the financial picture of the student and family, and/or something that has changed drastically since the FAFSA was submitted (i.e. a big change in family income, family status, employment, etc. from one year to the next). There will be procedures and guidelines that will determine if anything about your financial aid award can be changed, and by how much. If you feel your circumstances warrant special consideration, contact the financial aid office at the school(s) you are considering.
Be aware that subjective judgments by trained professional staff determine if any changes can be made, so schools may differ in if and how adjustments might be made.
Fact 5 - Financial aid is NOT intended to pay for car payments, credit card bills or an iPhone. Schools prepare a budget annually that takes into consideration what it costs to live and go to school for the 9 or 10 month academic year. Tuition, fees, room and board, travel and incidentals are averaged from a sampling of what students actually spend. Basically, that budget includes enough money to live and go to school, and anything on top of that is your responsibility. Remember, you are unlikely to be able to maintain the same lifestyle you are accustomed to, living on financial aid.
Unless your last name is Gates or Buffet (Warren, not Jimmy. . . ), plan to file the FAFSA and apply for financial aid. Don’t base your decision entirely on family income. Many other factors are taken into consideration to determine your eligibility, including; family size, number in college, family debt, and other assets, to name just a few. You certainly won’t receive any federal aid if you don’t apply!